Date: 1st Jan 2014
Today Rupee opened at 61.8350 above yesterday closing at 61.80. Dollar pressure was strong till noon session, touch 61.98 at 11.37 am. Later, Rupee traded strong against Dollar, appreciated and reaches near today opening price at 61.82. Today Rupee closed at 61.90, decline by 10 paisa compare to today opening level.
RBI Governor Rajan may take step toward Interest rate, if Inflation data rise in December month. Rupee raises 0.88% last month among Asian currencies, but yearly decline 11.66%.However, Rupee is expected to be range bound till Inflation data release on 13th January. Rupee is expected to be in the range of 61.50-62.70 till Inflation data release.
Natural Gas hit two year high on cold blast at Northeast America. On Thursday the heating fuel made the high of $4.947.
According to weather forecasting agencies severe cold weather is expected to remain across the eastern U.S. during the next three to five days. Heavy snow fall is also expected in the Northeast. Cities in the Northeast likely to get near to 10 inches of snow fall with high wind blow with very cold temperatures. Temperature is likely to fall sharply till Sunday.
We are expecting that the commodity may find support near to $4.45 to continue further gain. The commodity has provided annual return of 36.6% and has remained top gainer among all commodities.
Today Energy Information Administration will release storage data at 0330GMT. According to Bloomberg the storage is expected to fall by 104 billion cubic feet from earlier 287. After the data release we may see price within the range of $4.5 to $4.23.
Many of analysts are expecting Fed to cut bond purchase by $10 billion in second month consecutively. But are the fundamentals in support of tapering and does economy has shown expected results in this month?
In December Fed started tapering of long lasted easing program when economic indicators had shown more than expected results. During last month manufacturing industry had shown expansion, retail sales and core retail sales improved, home sales data were also good, core durable and durable goods orders had advanced, consumer sentiments were high. Mainly Non Farm Employment increased above previous result and beat economistsâ€™ expectations and unemployment rate fell to 7.0% from 7.3%.
Now if we look at this monthâ€™s results then Non Farm Payroll fell to 74k lowest since Jun 12, unemployment rate fell to 6.7% from 7%, Core retail sales was negative, manufacturing and non manufacturing indices fell a little, consumer confidence declined, core durable and durable goods orders fell sharply and home sales remained low compare to last month. Â Negative results have overweighed positive changes in economy.DXY index has remained volatile compare to the basket of 6 major currencies during this month.
Overall if Fed decides to roll back in this kind of economic scenario then we may see investment outflow from U.S. equity market. Investors would prefer to put their money in better markets where there are less chances of high volatility. It might be possible that investment turn towards commodity market that rise precious metal prices to new highs.
Right now bullion investors are exiting their position on fear of Fed stimulus cut but they better check fundamental possibility of tapering and its impact on U.S. economy.
We are expecting that this month Fed may not rollback asset purchase program and wait for better economic performance in next month. It may support precious metals and weaken dollar for short time. Investment towards emerging market may increase with strong currency levels.
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Yesterday WTI fell at eight months low of $91.24 on increasing production at global market. After EIA data release for weekly oil production the commodity dropped steeply and lost near to 1.8% on Wednesday.
According to Reuters production at Saudi Arabia has increased by 9.81 million barrels per day in December, up from 9.745 million barrels. At Libya oil production has gained on increased capacity of existing refineries and few others are also expected to resume near to Jan 12. On Thursday the dollar index advanced to its highest since 21st November and breached the level of 81.0 that lower the oil prices. If today payroll data and unemployment rate improves then it may further pressurize oil prices.
China trade balance narrowed to 25.6b from earlier 33.8b. According to the General Administration of Custom export rose by 4.3 percent from a year earlier and Imports increased by 8.3 percent. WTI gained after the import amount of crude oil surged to 6.3 million barrels a day. China is the worldâ€™s second largest oil importer after U.S.
Low prices may prompt investors to take long position as the commodity seems undervalued at present. WTI gained by 0.86% at $92.45 at euro markets. In other energy commodities Brent gained 0.33% at $106.74, Natural Gas up by 0.60% at $4.027.
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